Contact: Scott Denne
Zebra Technologies, a maker of asset-tracking technologies, has picked up Motorola Solutions’ enterprise business in a $3.45bn deal; one that’s larger than Zebra’s own market cap. The company will spend about half the cash on its balance sheet and raise $3.25bn in debt (it has none today) to complete the acquisition.
In addition to nearly tripling its sales and headcount, Zebra also gains a range of hardware products, such as mobile computing and RFID products, that will better enable it to transition into the Internet of Things. Zebra is no stranger to machine-to-machine technologies – it has consolidated several RFID assets over the last decade or so, but that category only made up about 5% of its business, which is concentrated on sales of printers and related software for printing items such as barcodes and plastic cards.
Motorola’s enterprise business brings about $2.5bn in trailing revenue to Zebra, which crested $1bn in annual sales for the first time in 2013. While Zebra will triple its revenue at a price of 1.4x trailing revenue, it’s paying a bit more than the 1x we usually see in a hardware divestment. Wall Street is skeptical about the deal so far, and is pushing its stock down 11% today.
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